Making the case for smart grids

By

Insead Knowledge

PublishedSunday, February 07, 2010

Is the smart and sustainable 'super-grid' reality or unrealisable fantasy? Can we continue to have energy security in the face of dwindling natural resources or can we rely on renewables to power up future generations? What are the alternatives and what role should businesses and governments play in 'greening' but not stalling the economy? These are just some of the issues that were discussed at the Insead 22nd Alumni Sustainability Executive Roundtable held recently at the school's Europe campus in Fontainebleau.

"When you have large amounts of wind for example – it goes up and down, it doesn't stay flat – somebody has got to deal with the up and down part of an instantaneously-balanced power supply grid, otherwise the grid collapses. So how do you do that? You do that with a smart grid," says Paul Kleindorfer, the Paul Dubrule Chaired Professor of Sustainable Development at Insead and moderator of the two-day event.

Though the smart grid has also come to mean smart appliances and improved distribution of transmission, Kleindorfer adds that an intelligent grid is central to the whole issue of "how we digest large amounts of renewable energy that would in fact move us towards the low carbon economy, that is being driven by these concerns about greenhouse gases". This, he explains, is why it was selected as the topic for the forum.

Kleindorfer, who believes that the electric power grid is "really challenged at this point", both in terms of its generation potential and the ability to digest large amounts of renewable energy, says that if the policymakers and parliamentarians get things wrong, "[it's] going to get us into an awful pickle". But getting them right is going to require a balance between proper policy and market-based institutions – that is, the role of business and sustainable consumption activities connected to business.

Spero Mensah, Vice-President of Strategy and Partnership at Areva T&D Network Management Solution, a company that provides solutions for carbon-free power generation and electricity transmission, says that because intermittent renewables such as wind pose specific challenges to the grid, something must be done to the grid if we are going to use a significant percentage of these renewables – 46 per cent to be exact, as stipulated by the International Energy Agency, as it aims to reduce carbon emissions by 50 per cent by 2050.

"The end-user has to become engaged in helping to reduce the demand. The grid also has to be [adjusted] to reduce the losses." This, he explains, would involve some self-diagnosis and reconfiguration, as well as the ability to integrate renewables back into the grid.

To keep the grid 'smart', Mensah proposes a 'demand response' model to "schedule our consumption of power by being more sensitive to the overall grid". The grid of today, he adds, should be designed to anticipate where the load is going to be.

'Demand response', he elaborates, can be implemented for example via solar power, smart appliances, storage capacity and smart thermostats that can charge and consume, as well as discharge and produce.

Dirk Hendricks, Director of the EU Liaison Office, World Future Council, says that information and education are key to a low carbon future, and that people must know what the alternatives would be, if they do not act.

"You have costs that can be avoided in the future if you do relevant investments nowadays." He suggests installing feed-in tariffs, which he says is "a kind of silver bullet" because it favours a quick deployment of renewable energy sources. "You can create a lot of jobs and additional wealth for society and you can create new businesses. So based on the microeconomic level, you will have a lot of advantages by looking into the sector."

Mensah of Areva, which also supplies nuclear energy, believes that nuclear power technology is going to be a very viable and safe alternative, and will figure prominently in the smart grid. "In developed countries, nuclear power is providing significant contributions to the resource portfolio of electric production – and this, without incident."

"It's a very mastered process; the supply chain is well-mastered, very controlled. It is a much more secured process, compared to other types of transportation. The nuclear power plants' design and operations... [have] high standards of security."

He adds there is an evolution in people's acceptance of nuclear energy, because once it is turned into electric power, people are not going to make a distinction between electricity produced by nuclear, wind or coal.

Henry Derwent, President and Chief Executive Officer of the International Emissions Trading Association, which is comprised of companies committed to emissions trading and carbon pricing, believes proposed changes to the grid and infrastructure will give the global community "a lot to chew over for a long time".

And with a growing body of evidence regarding climate change – not just in terms of scientific theory, but also its impact on fisheries, agriculture and so forth – Derwent says we would be fool-hardy to side-step the issue.

"I think the industry across Europe and across the whole of the world is going to have to start taking seriously the need to focus on lower carbon activities, low carbon products, low carbon strategies although the price of carbon across the world is only visible in certain places."

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